In this project-centered course, Darden's Ron Wilcox and BCG's Thomas Kohler will walk you through a real-world case, from problem statement to detailed analyses. You'll use all three lenses (cost, customer value, and competition) to recommend an optimal price—and then adjust to market disruptions. Utilizing the concepts, tools and techniques taught in previous Specialization courses—from basic techniques of economics to knowledge of customer segments, willingness to pay, and customer decision making to analysis of market prices, share, and industry dynamics—you will practice setting profit maximizing prices to improve price realization. You'll finish the course with a portfolio-building project that demonstrates your pricing prowess.

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Sep 01, 2017

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Excellent business and application oriented course

À partir de la leçon

Curveball

This week, you will respond to new developments in the LED light bulb market: a new competitor and new regulations. Just like in real life, you'll need to adjust your strategy when the competitive landscape changes and new regulations emerge and reconsider the retail marketplace and reevaluate the B2B market. You'll also head out into your own "real world" and do some detective work about the LED bulb market in your area and relate those finding to the case. We'll finish the course with BCG pricing experts sharing their insights into what makes pricing such a rewarding field.

Jean Manuel Izaret

Ronald T. Wilcox

Thomas Kohler

Associate Director, Pricing

Transcription

Next, I cover with you competitor pricing models. And, before we go really into the depths of it, let's first discuss when do competitor pricing models really matter. What are the prerequisites or the leading indicators on when you have to pay more attention to it? In my experience, therefore, it starts with the product cycle, maturity, meaning are you in an industry with immature products where there are still frequent technological disruptions or market disruptions or is it a very stable product, proven technology, with limited or at least predictive, predictable innovations? And, in that case, if you're more on the right hand side of the scale then it's clearly a candidate for the competitive pricing models. Next, is the industry concentration. Similar to the Y axis of our competitive pricing frameworks, the question here is: are there many players, fragmented markets, possibly with low entry barriers or do you have established large players with high entry barriers? And again, if you have few large competitors then it matters a lot how they price. Product differentiation is the next dimension. Here the access goes from undifferentiated and commoditized goods to something completely customized. Where competitive pricing models play a role is probably a little bit left of the center here. And lastly, how transparent is the pricing in the market you're operating? Is it totally intransparent or are the competitors price is very visible and transparent and you guessed it right. Competitive pricings model are a lot more important if you have a transparent market. I want to introduce an analog around chess when it comes to competitive pricing models. Chess is usually seen as a great example of strategy. There is a very obvious goal trying to set your opponent checkmate. You have to plan through every move and there are certain rules to the game and after every step your opponent is making a move that you have to respond to. Very similar in pricing. You have to think ahead of a series of moves, not only yours, but also the competitors. However, the competitors might do unexpected things. They might change even the strategy. So you have to re-adjust and tune your strategy. And lastly, there are a lot of ways to win this game if you know how it's played. And sometimes that's not as obvious as you might think. There are three use cases for competitor pricing models. First one is price setting. Here you set the price for a new product based on the next best alternative. We covered this example in the customer value course. The next one, our price moves where you try to actively manage your prices through wargaming. We'll talk through any detailed examples after this. And lastly, there are price wars where you try to avoid or break the vicious circle of lowering the prices round by round.